North Macedonia–Switzerland treaty protocol applies from 2027

The protocol amends the 14 April 2000 Convention on taxes on income and capital. It was signed on 19 May 2021, and the new Swiss announcement confirms that both states have now completed their approval procedures. The instrument is therefore in force rather than merely signed or ratification-pending.^[1][2][3]

Property-rich shares and profit adjustments

New Article 13(4) permits one state to tax a resident of the other state on gains from shares deriving more than 50% of their value, directly or indirectly, from immovable property in the first state. The rule excludes shares quoted on a recognised stock exchange and shares in a company whose property is used in its business.^[2]

The protocol also replaces the business-profits article with a function, asset and risk-based permanent-establishment attribution rule and a corresponding-adjustment mechanism. PE and associated-enterprise profit adjustments are generally limited to five years after the relevant taxable year, except for fraud, gross negligence or wilful default. These provisions generally apply for taxable years beginning on or after 1 January 2027.^[2]

Treaty claims receive a principal-purpose test

New Article 27a denies a treaty benefit for an item of income or capital where it is reasonable to conclude that obtaining the benefit was one of the principal purposes of an arrangement or transaction. Relief remains possible where granting it accords with the object and purpose of the relevant treaty provisions. Groups should therefore document commercial purposes and treaty context rather than rely on residence and payment routing alone.^[2]

For withholding taxes, the protocol applies to amounts payable from 1 January 2027. For other taxes, it applies to taxable years beginning on or after that date.^[1][2]

MAP arbitration is already effective

A taxpayer may present a mutual-agreement case to either competent authority within three years of the first notification of non-treaty taxation. If the authorities cannot resolve the case within three years after receiving all required information, unresolved issues go to arbitration on written request, subject to the protocol’s court-decision and acceptance conditions. Article XII makes these MAP changes effective from 22 October 2026 without regard to the taxable period.^[2]

Tax teams should identify treaty-covered payments, property-rich share disposals and open North Macedonian or Swiss disputes, then separate the immediate MAP change from the provisions beginning in 2027. The protocol changes treaty remedies and substantive entitlement rules; it does not itself create a new corporate return or payment date.^[2]